2012 Mock Morning Qn 38

CFA Level II
#1

Don’t quite get the part on why A “The company experienced more cash earnings than accounting earnings in 2010.” is the correct answer.

I do understand about the part on -ve accruals => +ve operating cash flows. But it does not seem the case when we look at the data in exhibit 1:

Operating CF: 2449 (2010), 3299 (2009) Operating Income: 6986 (2010), 2694 (2009)

Cashflow seems to be decreasing compared to accounting income which is rising.

#2

I think they’re basing the answer on the cash accrual ratio, which went down. With accrual ratios, the lower the better, the more cash,